Burial Insurance Benefits

Do You Have To Use Burial Insurance Benefits on Funeral Costs?

Today, the price of a funeral can be substantial, with the average cost across the U.S. standing at approximately $8,300. When factoring in additional items such as flowers, a head stone, and announcements, the cost can easily jump to $10,000 or more –  an amount that many families just simply don’t have readily available to pay.

The good news is that final expense life insurance – also often referred to as funeral insurance or burial insurance – is available for paying these types of costs. This coverage, typically purchased by those who are between the ages of 50 and 80 (also known as Senior Insurance), will generally have a face amount of between $5,000 and $50,000, this is known as your Burial Insurance benefit. 

These policies can also sometimes be easier to qualify for than regular life insurance, too – especially because final expense plans often do not require a medical exam as a part of the underwriting process. This means that someone who may have certain health related issues could still be able to obtain coverage.

What Can You Use Your Burial  Insurance Benefits For?

When the insured on a final expense insurance policy passes away, the Burial Insurance benefits are typically paid out to a named beneficiary. In many cases, the money will be used for paying off the insured’s funeral and related expenses, such as his or her:

  • Memorial Service
  • Transportation
  • Burial Plot
  • Obituary
  • Flowers

However, it is not required by the life insurance company that the funds from a final expense policy be used solely for these purposes. Therefore, if the insured has other pressing debts such as an outstanding credit card balance, a mortgage, any final uninsured medical costs, or other financial obligations, the funds from the final expense policy could also be used for paying these – or any other need that the beneficiary opts to use them for.

How to Assign Your Final Expense Insurance Proceeds

If you do opt to use the proceeds of your final expense life insurance policy for funeral and other related costs, one way to make the payment process easier is to simply assign the policy’s benefits directly to the funeral home.

This assignment of proceeds is made through the life insurance company. Oftentimes, the forms that are needed for this assignment process may be found at the funeral home. When doing so, you can still maintain the right to decide where the service will be held – leaving your loved ones with very little to worry about whenever the time comes.

Should there be any funds left over after all of the funeral costs have been paid, the money will be paid out to a named secondary beneficiary on your policy. This individual (or individuals) can then spend these proceeds as they wish.

What To Look For in a Final Expense Life Insurance Policy

When shopping for final expense life insurance, it is important that you ensure that you will have enough coverage to pay off the costs that you anticipate. You will also want to choose the right beneficiary – whether that ends up to be the funeral home, your spouse, or other loved one.

In addition, be sure that you have a good understanding of how the benefits will be paid out. This is because there may be a stipulation in the policy where the insured must own the plan for a certain amount of time in order for the full amount of death benefit to be released.